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A Behavioral Foundation of Satiation and Habituation

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  • Junyi Chai

    (Faculty of Business and Management, BNU-HKBU United International College, Zhuhai 519087, China
    Department of Operations, Innovation, and Data Sciences, ESADE Business School, 08172 Barcelona, Spain
    Institute of Social and Economic Research, Osaka University, Osaka 5650871, Japan)

Abstract

Tastes change over time. People’s tastes are distorted through two channels: satiation formation and habit formation. In this paper, we develop a theoretical foundation of satiation and habituation by an axiomatic approach. Our theory is based on a hierarchy of preference conditions called compensation independence. The behavioral assumption underlying the preference conditions are the psychological compensation of human beings. I flesh out an axiomatic system for general models of satiation and habit formation, which contains many functional forms in the literature as special cases. Moreover, I advance the axiomatization to accommodate the linear representations of satiation and habit formation that are prevailing in the literature. This paper contributes to the birth of a new generation of the behavioral foundation for modeling satiation and habit formation, which might improve on the current state of the art in understanding people’s tastes over time and preferences. Theoretically, this study contributes to the vein of time-nonseparable preferences.

Suggested Citation

  • Junyi Chai, 2023. "A Behavioral Foundation of Satiation and Habituation," Mathematics, MDPI, vol. 11(3), pages 1-18, January.
    • Handle: RePEc:gam:jmathe:v:11:y:2023:i:3:p:542-:d:1041485
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    References listed on IDEAS

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